Tesla stock is up more than 23% uh since the company reported quarterly results last week joining us now with more on Tesla Colin Rush Oppenheimer senior research analyst I thought it uh it was somewhat U disappointing some of the stuff that we heard from Tesla why did the stock perform so well I I guess it it's in the eye of the beholder yeah there there's a couple things one the gross margins on the auto side were were um better than expected did and it's pretty clear that the company is self- sustaining from a cash flow
perspective and as they continue to grow as an EV maker and we continue to be very bullish about their or on their EV technology it get it extends the runway on their ability to deliver on the autonomy opportunity uh and well we have some caution around that autonomous technology I I think folks started giving them a lot more credit for that Runway and their ability to deliver on that promise Colin if you were just looking at the the prospects for um selling cars selling Teslas around the world uh for premium prices I mean that part
of it is uh is is is it would that cause you to buy the stock here I mean and and even some of the profit being so profitable but a lot of it had to do with that pure profit the company gets from selling those environmental credits to to other automakers yeah I mean when we look at it it was um you know about a little less than $800 million in in credit uh Revenue that they had in the order and so there's a meaningful contribution to their their net income uh from those credits and
and that comes from multiple geographies but at the end of the day you know we we look at at least half if not more of the value being ascribed to their AI opportunity and particularly uh autonomy as the first application within that AI uh AI bucket and so for us you know the the EV opportunity is is Meaningful uh they're executing on it well they continue to drive costs lower and have great products but the AI um you know bucket of of profit pool that they're trying to dip into here is really what's driving the
value on the stock and and we think they're further off from actually being able to deliver on that than what the the stock is saying at this point if it does go Colin too and and I think that you know we were um we weren't a little bit surprised maybe that 30 trillion that someone would even mention that number for what the company could be worth and then Andrew said well why stop at 30 right I don't know you figure that's like uh Austin po terminal terminal value I why talk about trillions when you can
talk about billions uh but how much uh how what would that in how much would be the car business to get to anywhere let's say a multiple of what the the market cap is right now how much of that will still be electric uh cars and how much of it is going to be everything else that gets under the Tesla umbrella you know we're really looking at the potential for them to grow into you know5 to $6 doar of earnings by 2027 2028 uh and and so if you put a a multiple on that in
the The High Teens uh you can get yourself into the $100 maybe $120 range for the stock we're looking at the energy storage business at worth 20 to $30 and then the balance of the the stock price here is really uh being driven by the AI uh potential and and they certainly have a very capable engineering team that's working on these opportunities uh but it really uh comes down to when and what the competitive environment looks like and right now uh from a regulatory perspective certainly behind from a cars on the road uh perspective they
have more vehicles on the road but not vehicles that are actually uh you know driving themselves uh and so the testing process is going to take a fair amount of time before they can actually start monetizing that in a real way what about uh China competition from China how's that going to play out does it matter who's elected uh you know at this point uh you know you look back at history and and look at what happened with Chinese Auto or sorry Japanese automakers Korean automakers you know you really end up having to to make
vehicles uh locally uh in in domestic markets and so the the question is uh you know what's the technology underlying that and and we're seeing the oems in both Europe and the US make significant Investments on on driving cost reduction and I think limiting some of the competition uh you know I think the European market is is a real uh example of what may happen where we see byd starting to to penetrate that market in a little bit bigger way but starting to uh actually manufacture in Eastern Europe and turkey uh in the US I
think it's going to be hard you know in this political environment to to really see uh you know Chinese automakers start to penetrate this Market uh in a timely fashion that would start to take share from some of the existing manufacturers that are already here did did you know he was going to say no $25,000 we're just going to go straight to the to to the I think we we already understood that at the point that they uh said we're going to go to you know you know the the version v2.5 and and kind of
get halfway there on the existing platform it just doesn't uh just doesn't make sense for them to go to that low-end vehicle especially when you can start monetizing um you know some of the the ads functionality at a little bit higher rate I don't think they really need to uh drop down to those price levels to to continue to grow and we actually had units growing ahead of our peers on the street here in 25 and 26 uh and and I think they'll continue to grow into that opportunity they do have better EVS than most
of their their competitors on the road at this point and I don't think they need to drop down to that low end to really uh drive volume into the 3 to four million vehicle a year range okay great con what your price Target did you where is it you we're we're perform rated so we don't have price Target here and this is the stock that we think is kind of in no man's land right now
